Material Insights · Understanding the Material World

Steel and Transformers and power electronics

Most transformer cores are built from grain-oriented electrical steel (CRGO or GOES), a speciality grade made by few mills that is about a fifth of a transformer's cost. India imports most of what it uses, so CRGO supply and trade rules directly affect how fast it can expand its grid.

Steel (commodity) and Transformers and power electronics (energy): 5 relationships.

How they are linked

1. Core steel

Physical flow · Strong · Electrical steel to transformers

A transformer's magnetic core is stacked from thin sheets of grain-oriented electrical steel, whose aligned crystal structure cuts the energy lost each time the magnetic field reverses.

  • about 20% of a transformer's total cost from GOES
  • up to 39% more energy lost with Cleveland-Cliffs (US) GOES than with GOES from Japan's Nippon Steel and JFE

Quality matters as much as tonnage: lower-loss grades save energy over a transformer's decades of service, so buyers and regulators specify grades, and not every mill can supply them. General steel capacity cannot be switched to CRGO quickly, because it needs specialised rolling and annealing lines.

Sources: The Breakthrough Institute

2. India's import gap

Shared risk · High in India · Imported CRGO to Indian transformer makers

India makes only a small share of the CRGO its transformer industry needs, so supply depends on a handful of foreign mills and on import approvals.

  • about 400,000 t India's CRGO requirement, 2023-24, against about 50,000 t made at home
  • 239,000 t CRGO imported, 2023-24, from China, Japan, Russia and South Korea
  • 30% shortage of CRGO reported for India's power sector, October 2024

Reports in October 2024 tied the shortage to delayed renewal of Bureau of Indian Standards licences for several foreign suppliers, which need certification under the quality control order. A June 2026 GTRI estimate put imports at nearly 90% of requirements, and demand was expected to grow 10 to 12% a year.

Sources: SteelOrbis (reporting GTRI); The Hitavada (reporting GTRI); Deccan Chronicle

3. Cost and lead times

Cost and price · Strong · Electrical steel prices to transformer prices

When GOES prices rose, transformer prices followed, because the core steel is a large and hard to replace input and few factories can expand output quickly.

  • almost 100% rise in GOES prices since January 2020, to 2024
  • 60 to 80% rise in transformer prices since January 2020, to 2024
  • about 120 weeks average power transformer lead time, 2024, from about 50 weeks in 2021

The IEA found power transformer prices up by around 75% in real terms since 2019, with large units taking up to four years to procure. Steel was one driver alongside copper, which rose by about 50% from January 2020 to early 2024, so the price rise reflects a squeeze across the whole chain.

Sources: Wood Mackenzie; IEA

4. Price link: core material

Cost and price · Moderate · Both ways

Transformer prices move partly with steel, but the general steel index does not capture the speciality CRGO grade, which has its own tighter market.

  • 0.35 monthly change correlation
  • 0.59 12-month change correlation
  • 0.86 fitted elasticity

The true cost link is stronger than these figures suggest: GOES roughly doubled in price from January 2020 to 2024, a speciality move a broad index can dilute. Investors should watch electrical steel prices directly rather than a broad steel index.

Sources: Material Insights (World Bank, FRED, IMF data); Wood Mackenzie

5. Trade rules on CRGO

Policy · High in India · Steel trade policy to grid build-out

India uses quality control orders and trade remedies to protect domestic steelmakers, but for CRGO, where domestic output is small, these measures raise costs or delay supply for transformer makers.

  • Rs 9.15 lakh crore planned power grid investment to 2032

In June 2026 India opened an anti-dumping investigation into CRGO and amorphous metal imports from China, Japan, Korea and Russia, covering April 2025 to March 2026. Duties could support new domestic lines but would lift transformer costs while the grid investment programme is under way.

Sources: The Hitavada (reporting GTRI)

For investors

Key learnings

  1. GOES is about 20% of transformer cost and roughly doubled in price from 2020, so electrical steel, not general steel, drives the steel exposure of transformer makers.
  2. Transformer lead times stretched to about 120 weeks in 2024, so the few mills that make low-loss CRGO hold strong pricing power.
  3. In India, domestic CRGO met only about an eighth of demand in 2023-24, so new domestic capacity and trade measures shift margins between steelmakers and transformer makers.

What to track

  • CRGO or GOES price: Rising prices squeeze transformer makers on fixed-price orders (Monthly · steel price reporters, company results)
  • Transformer lead times and order backlogs: Lengthening lead times show core steel and factory capacity still binding (Quarterly · company results, Wood Mackenzie)
  • CRGO imports into India: Changes show how quality rules and duties affect supply (Monthly · Ministry of Commerce trade data)

For policymakers

Key learnings

  1. India needed about 400,000 t of CRGO in 2023-24 but made about 50,000 t, so grid expansion depends on imports, mainly from China, Japan, Russia and South Korea.
  2. Delayed renewal of quality control licences for foreign suppliers contributed to a reported 30% CRGO shortage in 2024, showing that quality rules need fast approval for inputs without domestic substitutes.
  3. Anti-dumping duties on CRGO would help domestic producers only if new lines are built, and would raise the cost of the Rs 9.15 lakh crore grid plan meanwhile.

What to track

  • BIS licences issued to foreign CRGO suppliers: Delays signal coming shortages for transformer makers (As issued · Bureau of Indian Standards)
  • Domestic CRGO capacity additions: New lines reduce import dependence and justify trade measures (As announced · Ministry of Steel, company filings)
  • Outcome of the CRGO anti-dumping investigation: Duties would raise transformer and grid costs (As notified · Directorate General of Trade Remedies)

India

India imports most of its CRGO, about 239,000 t in 2023-24 against about 50,000 t made at home, from China, Japan, Russia and South Korea, and its quality control order and 2026 anti-dumping probe shape transformer costs for its grid build-out.

Sources

  1. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  2. America makes the wrong steel for its transformer supply chain, The Breakthrough Institute (2026)
  3. GTRI: India's power sector facing 30 percent shortage of CRGO steel, SteelOrbis (reporting GTRI) (2024)
  4. Anti-dumping duty on electrical steel may push transformer costs, impact grid expansion: GTRI, The Hitavada (reporting GTRI) (2026)
  5. Supply shortages and an inflexible market give rise to high power transformer lead times, Wood Mackenzie (2024)
  6. Rising component prices and supply chain pressures are hindering the development of transmission grid infrastructure, IEA (2025)
  7. Delayed licence renewal leads to shortage of specialty steel in power sector, Deccan Chronicle (2024)